Enlink Midstream NAPTP Presentation

20
1 Strong. Innovative. Growing. NAPTP Presentation Barry E. Davis President & CEO May 21, 2015

Transcript of Enlink Midstream NAPTP Presentation

1 Strong. Innovative. Growing.

NAPTP Presentation Barry E. Davis President & CEO

May 21, 2015

Forward-Looking Statements

This presentation contains forward-looking statements within the meaning of the federal securities laws. Although these statements

reflect the current views, assumptions and expectations of our management, the matters addressed herein involve certain

assumptions, risks and uncertainties that could cause actual activities, performance, outcomes and results to differ materially than

those indicated herein. Such forward-looking statements include, but are not limited to, statements about future financial and

operating results, guidance, projected or forecasted financial results, objectives, project timing, expectations and intentions and

other statements that are not historical facts. Factors that could result in such differences or otherwise materially affect our financial

condition, results of operations and cash flows include, without limitation, (a) the dependence on Devon for a substantial portion of

the natural gas that we gather, process and transport, (b) our lack of asset diversification, (c) our vulnerability to having a significant

portion of our operations concentrated in the Barnett Shale, (d) the amount of hydrocarbons transported in our gathering and

transmission lines and the level of our processing and fractionation operations, (e) fluctuations in oil, natural gas and NGL prices,

(f) construction risks in our major development projects, (g) our ability to consummate future acquisitions, successfully integrate any

acquired businesses, realize any cost savings and other synergies from any acquisition, (h) changes in the availability and cost of

capital, (i) competitive conditions in our industry and their impact on our ability to connect hydrocarbon supplies to our assets,

(j) operating hazards, natural disasters, weather-related delays, casualty losses and other matters beyond our control, (k) a failure in

our computing systems or a cyber-attack on our systems, and (l) the effects of existing and future laws and governmental

regulations, including environmental and climate change requirements and other uncertainties. These and other applicable

uncertainties, factors and risks are described more fully in EnLink Midstream Partners, LP’s and EnLink Midstream, LLC’s filings with

the Securities and Exchange Commission, including EnLink Midstream Partners, LP’s and EnLink Midstream, LLC’s Annual Reports

on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Neither EnLink Midstream Partners, LP nor EnLink

Midstream, LLC assumes any obligation to update any forward-looking statements contained herein. The assumptions and

estimates underlying the forecasted financial information included in the guidance information in this press release are inherently

uncertain and, though considered reasonable by the EnLink Midstream management team as of the date of its preparation, are

subject to a wide variety of significant business, economic, and competitive risks and uncertainties that could cause actual results to

differ materially from those contained in the forecasted financial information. Accordingly, there can be no assurance that the

forecasted results are indicative of EnLink Midstream’s future performance or that actual results will not differ materially from those

presented in the forecasted financial information. Inclusion of the forecasted financial information in this press release should not be

regarded as a representation by any person that the results contained in the forecasted financial information will be achieved.

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Non-GAAP Financial Information

This presentation contains non-generally accepted accounting principle financial measures that we refer to as adjusted EBITDA, gross operating margin, segment cash flow, adjusted EBITDA of EnLink Midstream Holdings (EMH) and maintenance capital expenditures. We define adjusted EBITDA as net income from continuing operations plus interest expense, provision for income taxes, depreciation and amortization expense, impairment expense, stock-based compensation, gain on noncash derivatives, transaction costs, distribution of equity investment and non-controlling interest and income on equity investment. Gross operating margin is defined as revenue minus the cost of purchased gas, NGL, condensate and crude oil. Segment cash flows is defined as revenue less the cost of purchased gas, NGLs, condensate, crude oil and operating and maintenance expenditures. Adjusted EBITDA of EMH is defined as earnings plus depreciation, provisions for income taxes and distribution of equity investment less income on equity investment.

The amounts included in the calculation of these measures are computed in accordance with generally accepted accounting principles (GAAP) with the exception of maintenance capital expenditures. Maintenance capital expenditures are capital expenditures made to replace partially or fully depreciated assets in order to maintain the existing operating capacity of the assets and to extend their useful lives.

We believe these measures are useful to investors because they may provide users of this financial information with meaningful comparisons between current results and prior-reported results and a meaningful measure of the Partnership’s and the General Partner's cash flow after satisfaction of the capital and related requirements of their respective operations.

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Stability of cash flows ~95% fee-based contracts

~50% of gross operating margin from long-term Devon contracts

Top tier midstream energy service for our customers Mastio Service Award winner in 2014

Leverage Devon Energy sponsorship for growth Expect significant growth from dropdowns

Serve Devon E&P portfolio in its growth areas

Strong organic growth South Louisiana, West Texas and Ohio River Valley (ORV) expansion projects

Top-tier balance sheet Investment grade credit rating at ENLK since inception

Strong liquidity with a $1.5 billion credit facility

Note: Adjusted EBITDA and gross operating margin are non-GAAP financial measures and are explained on page 3.

Our Strategy: Stability Plus Growth

The Vehicle for Sustainable Growth

Significant Size & Scale

~ 9,100 miles of pipelines

16 gas processing plants, 3.6 Bcf/d capacity

7 NGL fractionators, 280,000 Bbl/d capacity

Diversity of Basins

Barnett

Permian

Midcontinent: Cana & Arkoma-Woodford

Eagle Ford

Ohio River Valley: Utica & Marcellus

Louisiana: demand market (gas, NGLs)

Diversity of Services

Natural Gas: transport, processing, storage & mktng.

NGL: transport, fractionation, storage & mktng.

Condensate: transport, storage & mktng.

Crude: transport, storage & mktng.

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Powered By a Diverse Set of Assets & Services

EnLink Midstream Partners, LP

Master Limited Partnership NYSE: ENLK

(BBB / Baa3)

EnLink Midstream, LLC

General Partner NYSE: ENLC

Public

Unitholders

~70% ~30%

~1% GP

~17% LP

EnLink Midstream Holdings (formerly Devon Midstream Holdings)

~32%

LP

~50%

LP

Devon Energy

Corp. NYSE: DVN

(BBB+ / Baa1)

GP + 75% LP

The Vehicle for Sustainable Growth: MLP Structure with a Premier Sponsor

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Dist./Q Split Level

< $0.2500 2% / 98%

< $0.3125 15% / 85%

< $0.3750 25% / 75%

> $0.3750 50% / 50% Q1-15 Dist./Q:

$0.38

ENLC owns 100% of IDRs

~25%

LP

Note: The ownership percentages shown above are as of the date of this presentation.

Sustainable

Growth

Substantial

Scale &

Scope

Diverse,

Fee-Based

Cash Flow

Strong Balance

Sheet &

Credit Profile

The Vehicle for Sustainable Growth

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Well Positioned with a Strong Balance Sheet

Investment grade balance sheet at ENLK (BBB, Baa3)

Target debt / adjusted EBITDA of ~3.5x

Strong liquidity with $1.5 billion credit facility

~ 95% fee-based margin

Balanced cash flow (Devon ~50%)

Balanced portfolio of rich gas processing and NGL/crude oil

Total consolidated enterprise value of ~$13 billion

Projected 2015 Combined Adjusted EBITDA: ~$740 MM

Geographically diverse assets with multi-commodity exposure

Stable base cash flow supported by long-term contracts

Organic growth opportunities through Devon’s upstream portfolio

Expect significant growth from drop downs

Note: Adjusted EBITDA is a non-GAAP financial measure and is explained in greater detail on page 3.

% of 2015E

Segment

Cash Flow *

Devon Bridgeport Contract - 9 years remaining on contract with 4 years remaining on minimum volume commitments (MVC)

Devon East Johnson County Contract - 9 years remaining on contract with 4 years remaining on MVC

Existing FT Transmission & Gathering - Volume Commitments with remaining terms of 2-10 years

Bearkat Plant - Volume Commitment with 10 year term from initial flow

Devon Cana Contract - 9 years remaining on contract with 4 years remaining on MVC

Linn Northridge Contract ** - 9 years remaining on contract with 4 years remaining on MVC

North LIG Firm Transport - Reservation fee with avg remaining life of 3 years

Firm Treating & Processing - Remaining term minimum 2 years

Cajun-Sibon Phases I & II - 5 & 10 year agreements for supply and sale of key products

E2 Compression / Stabilization Contract - 7 years ~62%

~80%

ORV

% of Total Segment Cash Flow for 2015E *

~77%

 Segment / Key Contract

Texas

Oklahoma

~92%

Louisiana

~83%

The Vehicle for Sustainable Growth

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Cash Flow Stability from Long-Term Contracts

* Based on 2015 Guidance estimates.

** As previously disclosed, Devon assigned this contract to a subsidiary of Linn Energy, effective as of December 1, 2014

Note: Segment cash flow is a non-GAAP financial measure and is explained in greater detail on page 3.

~80% of EnLink’s cash flows are supported by long-term, fee-based contracts with either

firm transport agreements or minimum volume commitments.

Devon Energy Today

Balanced portfolio

Q1 ’15 Production Mix: ~60% liquids &

40% gas

2015 E&P Capital Budget: $3.9 - $4.1 Billion

Long-term contracts provide stability of

cash flows

Fixed fee contracts with rate escalators through

2023

Minimum volume commitments through 2018

Potential for additional midstream

activity in:

Permian Basin

Anadarko Basin

Eagle Ford

Additional build-out in core assets

New basins 9

Sponsored By a Leading North American E&P

Heavy Oil

Rockies Oil

Barnett Shale

Eagle Ford

Permian Basin

Anadarko Basin

Oil Assets

Liquids-Rich Gas Assets

The Four Avenues for Growth

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Destination 2017

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Line of Sight to Double the Size of EnLink

LA

$85 WTI

$4.00 gas

Incremental Adjusted EBITDA

Assets VEX & Access

Pipelines

Cana, Eagle Ford

& Permian

Louisiana,

Permian,

Eagle Ford, Utica

TBD

Estimated Capital VEX: $210-220

MM

Access: TBD

$750 MM –

$1.25 B $1.0 – 1.75 B $1.0 – 2.0 B

Annual Estimated Adjusted

EBITDA by 2017 $130 – 180 MM $90 – 160 MM $100 – 175 MM $125 – 250 MM

Note: The information in this slide is for illustrative purposes only.

* Based on 2015 Guidance. Adjusted EBITDA is a non-GAAP and is explained in greater detail on page 3. See Appendix for a reconciliation to Operating Income.

** Includes price deck and potential basin decline sensitivities

$500

$700

$900

$1,100

$1,300

$1,500

$1,700

2015EAdjusted EBITDA*

DropDowns

Growingwith DVN

OrganicGrowth**

M&A Destination 2017

Combined Adjusted EBITDA ($000)

$1.4 B

First Year Project Execution ~$3.7 Billion of Drop Downs, Growth Projects

and Acquisitions

E2 in Ohio River Valley

25% of EMH

Victoria Express in Eagle Ford

AVENUE 1

Dropdowns

~$1.3 Billion

Completed

Ajax plant announced and

associated gathering in Permian

~$200 MM+

Announced

AVENUE 2

Growing

With Devon

Cajun-Sibon in TX/LA complete

Bearkat construction in Permian

complete

ORV condensate expansion announced

Marathon-Garyville pipeline announced

~$1 Billion

Completed

~$300 MM+

Announced

AVENUE 3

Organic Growth

Projects

Chevron Gulf Coast pipelines and

storage in South Louisiana

Coronado Midstream in Midland basin

LPC in Midland basin

~$935 MM

Completed

AVENUE 4

Mergers &

Acquisitions 12

Avenue 1: Drop Downs

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Devon Sponsorship Creates Drop Down Opportunities

2014 2015 2016 2017

Other Potential Devon Drop Downs *

E2

25%

EMH *

Access Pipeline *

Victoria

Express

Pipeline

* Cautionary Note: The information regarding these potential drop downs is for illustrative purposes only. No agreements or understandings exist regarding the terms of these potential drop

downs, and Devon is not obligated to sell or contribute any of these assets to EnLink. The completion of any future drop down will be subject to a number of conditions. The cost and

adjusted EBITDA Information on this slide is based on management’s current estimates and current market information and is subject to change.

** Based on 2015 Guidance and accounts for 25% of the total estimated adjusted EBITDA of EMH. Adjusted EBITDA of EMH is a non-GAAP financial measure and is explained on page 3.

Note: Adjusted EBITDA is a non-GAAP financial measure and is explained on page 3.

Drop Down Cost:

~$193 MM Estimated Adjusted EBITDA:

~$20-25 MM

Capital Cost for Construction:

~$1.0 B Estimated Adjusted EBITDA

by 2017:

~$100-150 MM

Drop Down Cost for 25% Interest:

$925 MM Estimated Adjusted EBITDA:

~$100 MM **

Drop Down Cost:

~$210-220 MM Estimated Adjusted EBITDA

by 2017:

~$30 MM

25%

EMH

Avenue 1: Drop Downs from Devon Victoria Express & Access Pipeline

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Three ~180 mile pipelines from Sturgeon

terminal to Devon’s thermal acreage

~30 miles of dual pipeline from Sturgeon

Terminal to Edmonton

Capacity net to Devon: - Blended bitumen: 170,000 Bbl/d

Devon ownership: 50% ~$1B invested

Projected completion in 2016

~56 mile crude oil pipeline, truck terminal and

storage facilities in Eagle Ford

Pipeline capacity: - 50,000 Bbl/d currently

- Expanding to 90,000 Bbl/d by year-end 2015

Storage capacity: - 150,000 Bbl currently

- Expanding to 360,000 Bbl by year-end 2015

Drop down completed on April 1, 2015 - $180 MM acquisition cost with $30-$40 MM

of follow-own capital

Access Pipeline Victoria Express

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Avenue 2: Growing With Devon Significant Growth Plans in Anadarko Basin

Devon Activity in Anadarko Basin

Averaging 8 rigs in 2015 (including non-operated)

in Cana-Woodford

Cana/Meramec Acreage: ~340,000 net acres

Workover activity planned in 2nd half of 2015

Acid treatments performed on 200+ wells in 2014

Avg. rates per well increased 1-2+ MMCFE/d

Payback period <3 months

Emerging opportunities

35,000 net acres in STACK oil window

De-risked 60,000 net acres in Meramec in Q1 ‘15

Significant undrilled well inventory

Cana: expect to drill ~75 wells in 2015

Meramec: expect to spud or participate in ~30 more

wells in 2015

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EnLink Assets in the Cana-Woodford

Pipeline: 410 miles, 530 MMcf/d capacity

Processing: one plant with 350 MMcf/d capacity

Avenue 3: Organic Growth Projects Gas Supply Moving from Northeast to Gulf Coast to Meet LNG and Industrial Markets

16 Source: EIA/RBN Energy

0.01.02.03.04.05.06.07.08.09.0

Bcf/

d

New Gas Pipelines to Gulf Coast

Source RBN Energy, January 2015

Source: En*Vantage 17

Incremental US

NGLs

by 2020

1.6 MM Bbl/d

By 2020 Louisiana

will only contribute

~4% of total supply,

but will account for

~25% of ethane

demand

Increase in NGL Supplies

2015 – 2020 (000’s Bpd)

Excess supplies will

make their way to the

Gulf Coast

~80% of North

American petchem

capacity is in Texas /

Louisiana

Avenue 3: Organic Growth Projects Louisiana NGL Market Is Short on Local Supply and Long on Demand from Petchems

Avenues 3 & 4: Organic Growth and M&A South Louisiana Market Leading Position

Completed Cajun-Sibon expansion in Q4 2014

258 miles of NGL pipeline from Mont Belvieu area to NGL fractionation assets in

South Louisiana

140 MBbl/d south Louisiana fractionation expansion

Acquired gulf coast assets from Chevron for $235 MM on November 1, 2014

~1,400 miles of natural gas pipelines in three systems spanning from Port

Arthur, TX to the Mississippi River corridor

~11 Bcf of natural gas storage capacity in three south Louisiana caverns

Ownership and management of title tracking services offered at Henry Hub

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Avenue 4: Mergers & Acquisitions Coronado Midstream & LPC in Midland Basin

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Coronado Midstream Holdings

Closed on March 16, 2015 for ~$600 MM

Assets include:

~175 MMcf/d of gas processing capacity

~270 miles of gas gathering pipelines

~100 MMcf/d of processing capacity under construction

Production dedication from over 190,000 acres

Key producers include: Diamondback Energy, Inc. and RSP

Permian, Inc. and Reliance Energy

Acquisition multiple: 7-8x long-term adjusted EBITDA

LPC Crude Oil Marketing

Closed on January 31, 2015 for $100 MM

Assets include:

13 pipeline and refinery injection stations,

~67 miles of crude gathering systems

43 tractor trailers

Extensive crude oil first purchasing operation

Started moving Devon volumes in Q1 2015

Acquisition multiple: 8x run rate adjusted EBITDA

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Stability of cash flows ~95% fee-based contracts

~50% of gross operating margin from long-term Devon contracts

Top tier midstream energy service for our customers Mastio Service Award winner in 2014

Leverage Devon Energy sponsorship for growth Expect significant growth from dropdowns

Serve Devon E&P portfolio in its growth areas

Strong organic growth South Louisiana, West Texas and Ohio River Valley (ORV) expansion projects

Top-tier balance sheet Investment grade credit rating at ENLK since inception

Strong liquidity with a $1.5 billion credit facility

Note: Adjusted EBITDA and gross operating margin are non-GAAP financial measures and are explained on page 3.

Our Strategy: Stability Plus Growth